{"id":1427393,"date":"2023-09-14T09:00:00","date_gmt":"2023-09-14T13:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1427393"},"modified":"2023-09-14T09:00:00","modified_gmt":"2023-09-14T13:00:00","slug":"weight-loss-giant-novos-fat-valuation-leaves-no-room-for-error","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/weight-loss-giant-novos-fat-valuation-leaves-no-room-for-error\/1427393\/","title":{"rendered":"Weight-Loss Giant Novo’s Fat Valuation Leaves No Room For Error"},"content":{"rendered":"

Weight-Loss Giant Novo’s Fat Valuation Leaves No Room For Error<\/span><\/p>\n

\n

by Jonas Ekblom\u00a0and\u00a0Michael Msika, Bloomberg Markets Live reporters and strategists<\/em><\/p>\n

The popularity of Danish drugmaker\u00a0Novo Nordisk\u00a0has propelled its shares to a sky-high valuation, leaving little room for any disappointment with Europe\u2019s\u00a0most-valuable\u00a0company.<\/p>\n

The vast growth potential of weight-loss drugs Ozempic and Wegovy have driven the Danish company\u2019s shares up more than 40% this year. That\u2019s taken its market capitalization surging beyond $400 billion ahead of a stock split that\u2019s due to take effect on Wednesday.<\/strong><\/p>\n

With that has come a valuation that is dividing opinion among\u00a0analysts. A 12-month forward price-to-earnings ratio of around 34 is nearly double that the Stoxx 600 Health Care subindex. According to UBS Group\u2019s\u00a0Michael Leuchten, that\u2019s too rich.<\/p>\n

“I don\u2019t believe the obesity revenue opportunity will be as big as Novo\u2019s current valuation implies,\u201d<\/strong> Leuchten said in an interview. His price target of 720 Danish kroner is the lowest on the Street, and roughly half of the current price.<\/p>\n

<\/a><\/p>\n

With Novo having 18 buy recommendations and only six sells among analysts tracked by Bloomberg, the bears are among the minority. Barclays\u2019\u00a0Emily Field\u00a0is one of those in the bull camp, saying investors need to consider the type of once-in-a-lifetime, society-changing drugs that Novo is producing.<\/p>\n

She isn\u2019t alone in that opinion. JPMorgan analyst\u00a0Richard Vosser\u00a0boosted\u00a0his price target for Novo last week to a near Street-high of 1,500 Danish kroner, expecting the company to capture nearly half of a global obesity drug market it projects to be worth $71 billion within a decade.<\/p>\n

<\/a><\/p>\n

A key catalyst, Vosser says, will be the full data release from a trial investigating how semaglutide, the active ingredient in Wegovy and Novo\u2019s diabetes drug Ozempic, can\u00a0lower the risk\u00a0of heart attacks and strokes by a fifth. However, among the risks is rivals catching up. While Novo might have been first out of the door, it isn\u2019t without challengers.\u00a0Eli Lilly\u2019s\u00a0Mounjaro is currently the nearest competitor. <\/strong><\/p>\n

\u201cIt\u2019s a race-to-arms and can you jump to the conclusion that Novo can win? I don\u2019t think so,\u201d said Leuchten. He thinks Mounjaro has better efficacy and is the most likely winner. Leuchten also has doubts that the pharmacological weight-loss market will be the seismic game-changer for health care that some believe.<\/p>\n

\u201cThe largest mistake people do is thinking this fixes the problem,\u201d he said. While Wegovy can play a part in fighting rising obesity rates, its high price relative to other weight-loss methods is likely to stymie its success as health-care providers and insurers will increasingly balk at the cost, he said.<\/p>\n

The bulls are undeterred and say the stock\u2019s high valuation will end up being justified over time. In fact, compared to Eli Lilly\u2019s 50 times forward P\/E ratio, Novo Nordisk even looks cheap<\/strong>. Yet Lilly has been boosted not only by its potential in weight-loss drugs but also a successful final-stage trial of its experimental treatment for Alzheimer\u2019s, another hot area of the pharmaceuticals sector.<\/p>\n

<\/a><\/p>\n

\u201cGiven this is a multi year story \u2013 we\u2019re not looking at this year\u2019s P\/E, next year\u2019s P\/E \u2014 that\u2019s not what\u2019s important,\u201d Barclays\u2019 Field said. \u201cIt\u2019s how big can this market be.\u201d<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 09\/14\/2023 – 05:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/weight-loss-giant-novos-lofty-valuation-leaves-no-room-error<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Weight-Loss Giant Novo’s Fat Valuation Leaves No Room For Error by Jonas Ekblom\u00a0and\u00a0Michael Msika, Bloomberg Markets Live reporters and strategists The popularity of Danish drugmaker\u00a0Novo…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1427393","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-5Zkt","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1427393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1427393"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1427393\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1427393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1427393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1427393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}